Financial paperwork concerns weigh on ASIC

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New ASIC chief Jeffrey Lucy said in Melbourne yesterday he believed financial advisers were failing to provide easily digestible advice "at the right level of conciseness".Picture:Shannon Morris

Some people seeking financial advice are being drowned in paperwork, with lawyers pushing financial advisers to include minuscule and irrelevant details in explanations that consumers are now legally entitled to, the chairman of the corporate watchdog said yesterday.

The new chief of the Australian Securities and Investments Commission, Jeffrey Lucy, told a Melbourne luncheon hosted by the Securities Institute and the Institute of Chartered Accountants in Australia, that neither ASIC nor the Howard Government was satisfied that financial advisers were providing advice "at the right level of conciseness.

"We've been meeting with stakeholder groups, we've been making our views very clear," he said.

"We think that what's currently out there in the marketplace is a significant overkill of what's really required."

He said financial planning organisations were relying on legal advice that suggested nothing be left out of product disclosure statements, which provide details on individual investment opportunities, and statements of advice, which are framed in line with the financial needs of individual investors.

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Mr Lucy said ASIC was concerned at the unwieldy length of the documents and the unnecessary duplication of information. "There is not a clear, concise and effective regime as required," he said.

ASIC's executive director of financial services regulation, Ian Johnston, said that ASIC was working with the Investment and Financial Services Association to develop model product disclosure statements.

It was also working with the Financial Planning Association to offer its opinion on individual statements of advice, in particular whether they were appropriate to the needs of individuals.

Mr Johnston said that the appropriate length of a statement advice would depend on the needs of the individual for whom it was written.

Mr Lucy told the luncheon that he believed the industry was still settling in to the new legal framework that took effect in March. He said that ultimately, individuals' desire for an easily understood document would force the sector to change the way it frames communications to clients to meet that demand.